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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of August 11, 2000 and effective
as of and simultaneous with the Merger (the "Effective Date"), is among XXXX X.
XXXXXX (the "Executive"), Xxxx Sports Corp., a Delaware corporation (the
"Holding Company"), and Xxxx Sports, Inc., a California corporation (the
"Operating Company"). The Holding Company and the Operating Company are
collectively referred to herein as the "Company."
WHEREAS, the Company is engaged primarily in the business of
designing, producing, distributing, marketing, advertising and selling bicycle
helmets, bicycle accessories and related products;
WHEREAS, pursuant to an Agreement and Plan of Recapitalization (the
"Recapitalization Agreement") among the Company, Xxxx Sports Holdings, LL.C., a
Delaware limited liability company, and Andsonica Acquisition Corp., a Delaware
corporation ("Newco"), Newco will merge with and into the Company and the
Company will continue as the surviving corporation (the "Merger");
WHEREAS, the Executive currently serves as the President and Chief
Executive Officer of the Company pursuant to the terms of an Amended and
Restated Employment Agreement dated February 17, 1998 (the "Prior Employment
Agreement");
WHEREAS, the Executive's abilities and services are unique and
essential to the prospects of the Company; and
WHEREAS, the Company and the Executive desire to terminate the Prior
Employment Agreement and enter into this Agreement in substitution thereof to
provide for the employment of the Executive by the Company upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereby agree as follows:
1. Employment; Term. The Company hereby employs the Executive
and the Executive hereby agrees to be employed by the Company upon the terms and
subject to the conditions contained in this Agreement. The term of this
Agreement shall commence as of the Effective Date and shall continue until the
fourth anniversary of the Effective Date (the "Term"), unless earlier terminated
pursuant to Section 4 hereof, provided that this Agreement shall automatically
be renewed for successive additional one year terms unless terminated by either
party on not less than 180 days written notice prior to such next renewal date.
As used herein, the term "Employment Period" shall mean the period from the
Effective Date until the earlier to occur of (i) the expiration of the Term or
(ii) the earlier termination of the Executive's employment hereunder pursuant to
Section 4 hereof. Notwithstanding any other provision contained herein, this
Agreement shall not become effective and will have no force or effect unless the
Merger shall occur as contemplated by the Recapitalization Agreement.
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2. Position; Duties; Responsibilities.
2.1 Position; Duties. The Company shall employ the
Executive as the Chairman of the Company. The Executive shall faithfully and
loyally perform to the best of her abilities all the duties reasonably assigned
to her by the Board of Directors of the Company (the "Board"), shall devote such
business time, attention and effort to the affairs of the Company as is
reasonably necessary for the proper performance of such duties and shall use her
reasonable best efforts to promote the interests of the Company. Notwithstanding
the foregoing, the Executive may serve as a director, officer or paid consultant
of business corporations other than the Company or civic or community
organizations or entities, provided that such activities do not violate the
terms of any of the covenants set forth in Sections 7 and 8 hereof and do not
interfere with her duties hereunder. Current activities of the Executive are
listed on Schedule 2.1 hereto.
2.2 Responsibilities. The Executive shall have such
responsibilities as are consistent and customary with her position.
2.3 Directorship. The Company shall take all actions
reasonably necessary to elect the Executive to the Board and to maintain the
Executive's position as a director during the Employment Period. At the request
of the Board, upon her termination of employment with the Company for any
reason, the Executive shall resign as a member of the Board and as an officer of
the Company and shall resign from any other position she may have with the
Company or any of its affiliates.
2.4 Relocation. The Executive acknowledges that the
Company intends to relocate its headquarters operations to Dallas, Texas and
that the Executive will assist in the relocation process at the Company's sole
expense.
3. Compensation.
3.1 Base Salary. During the Employment Period, the
Company shall pay to the Executive an annual base salary at the rate of $425,000
per annum, payable in accordance with the Company's executive payroll policy.
Such base salary shall be reviewed annually at the beginning of each Fiscal Year
(as defined below) and may be increased (but shall not be decreased), in the
sole discretion of the Board. The Executive's base salary, as such base salary
may be increased annually hereunder, is referred to herein as the "Base Salary."
3.2 Annual Performance Bonus.
(a) Beginning on July 1, 2000, for each
fiscal year (July 1 through June 30) during the Employment Period (each, a
"Fiscal Year"), the Executive shall be eligible to receive, in addition to Base
Salary, a bonus (the "Bonus") for services rendered during each such Fiscal Year
in accordance with this Section 3.2. The Bonus shall be paid as a percent of
Base Salary, based upon the achievements of Target EBITDA, as provided in
accordance with the following table:
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PERCENTAGE PERCENTAGE OF
OF TARGET EBITDA SALARY BONUS ELIGIBILITY
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------------------------------------------------------------ ---------------------------------------------------------
90% 50%
------------------------------------------------------------ ---------------------------------------------------------
100% 100%
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110% or More 150%
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In accordance with the above table, if EBITDA achieved for any calendar year
exceeds 90% Target EBITDA, but is less than 100% Target EBITDA, the Bonus shall
be such percentage of Base Salary between 50% and 100%, calculated on a
straight-line basis, as corresponds to the relative achievement of EBITDA, with
50% corresponding to 90% Target EBITDA and 100% corresponding to 100% Target
EBITDA. If EBITDA achieved for any calendar year exceeds 100% Target EBITDA, but
is less than 110% Target EBITDA, the Bonus shall be such percentage of Base
Salary between 100% and 150%, calculated on a straight-line basis, as
corresponds to the relative achievement of EBITDA, with 100% corresponding to
100% Target EBITDA and 150% corresponding to 110% Target EBITDA.
(b) Notwithstanding anything in this
Agreement to the contrary, for the Fiscal Year ending on June 30, 2000, the
Executive shall be paid a bonus in accordance with the Fiscal Year 2000 Plan.
The Fiscal Year 2000 Bonus shall be paid to the Executive at such time as
bonuses are paid to executives of the Company generally for Fiscal Year 2000,
but in no event later than August 31, 2000.
(c) Target EBITDA for the Fiscal Year ending
June 30, 2001 shall be $50,000,000. Target EBITDA for Fiscal Years after Fiscal
Year 2001 shall be established annually by the Board. In the event of an
acquisition, disposition or other similar extraordinary corporate event which
would significantly alter the Target EBITDA established for such Fiscal Year,
the parties shall negotiate in good faith to set new levels of Target EBITDA.
(d) "EBITDA" shall be calculated in
accordance with generally accepted accounting principles.
(e) Each Bonus to which the Executive
becomes entitled other than the Fiscal Year 2000 Bonus, shall be paid 30 days
following the rendering of audited financial statements for the relevant Fiscal
Year (the "Payment Date"). For the avoidance of doubt, the Executive shall only
be entitled to receive the Bonus for any Fiscal Year if she was employed by the
Company on the last day of such Fiscal Year.
3.3 Stock Options. Upon the Effective Date or as soon
as administratively feasible thereafter, the Company shall grant the Executive
options to purchase a number of shares of common equity of the Company equal to
12.5% of the Management Option Pool less that number of options having an
aggregate exercise price of $600,000, which Management
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Option Pool the Company represents and warrants shall equal not less than 15% of
the issued and outstanding shares of common equity as of the Effective Date (the
"Awarded Options").
3.4 Perquisites. During the Employment Period and
during the Severance Period (as defined below), the Company shall pay for the
Executive's entire monthly or annual car payment (whether pursuant to a lease or
otherwise) and insurance for one automobile, and such payments shall be made
directly by the Company to the applicable payee. During the Employment Period,
the Company shall reimburse the Executive for all other reasonable expenses
relating to the operation of such automobile in the performance of her duties
for the Company. The Company shall also reimburse Executive for all reasonable
expenses relating to the Executive's commuting by commercial airline between the
San Xxxx and Los Angeles metropolitan areas, until such time as the Company is
relocated to Dallas, Texas in accordance with Section 2.4 of this Agreement.
Notwithstanding any other provision in this Agreement to the contrary, upon
Executive's resignation or termination for any reason the Executive may, at her
option, elect to purchase from the Company the automobile described in the first
sentence of this Section 3.4, it being understood and agreed that, in
furtherance of the foregoing, (i) if the Company is then leasing such automobile
from a third party, Executive may assume such lease with no additional payment
to the Company or such third party and (ii) if the Company owns such automobile,
Executive may purchase it from the Company for a purchase price equal to the
book value of such automobile on the Company's books.
3.5 Promissory Note. Upon the fifth anniversary of the
Effective Date, whether or not the Executive is then employed, but provided that
Executive has not disparaged the Company from the date hereof until such fifth
anniversary, the Company shall forgive the promissory note of the Executive,
dated as of April 17, 2000, in the face amount of $600,000 (the "Promissory
Note"). Until such time as the Company forgives the Promissory Note, in
connection with its tax reporting the Company shall treat the Promissory Note
and its obligations with respect thereto in a manner that is consistent with the
manner in which the Executive treats the Promissory Note for tax reporting
purposes, and, in furtherance of the foregoing, in connection with any tax
reporting which may relate to the Promissory Note the Company shall consult with
the Executive with respect to the Executive's intended tax reporting with
respect to the Promissory Note, it being understood and agreed that upon the
Company's forgiveness of the Promissory Note as contemplated by this Section 3.5
the Company shall deduct the amount of the Promissory Note (including any
interest owed thereon) as a compensation expense, regardless of how the
Executive treats the Promissory Note for tax reporting purposes.
3.6 Reimbursement of Expenses. During the Employment
Period, the Company shall reimburse the Executive for all expenses reasonably
incurred by her in connection with the business of the Company, upon
presentation of proper receipts or other proof of expenditure and subject to
such reasonable guidelines or limitations provided to the Executive and applied
prospectively, as established by the Company.
3.7 Vacation. During the Employment Period, the
Executive shall be entitled to six weeks of paid vacation and sick leave in
accordance with Company policy.
3.8 Participation in Benefit Plans. During the
Employment Period, the Executive shall be entitled to participate in any profit
sharing plan, retirement plan, group life
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insurance plan or other insurance plan or medical expense plan maintained by the
Company for its senior executives generally, in accordance with the general
eligibility criteria therein. In addition, the Executive shall be reimbursed for
all medical and dental expenses (including the payment of any premiums and any
taxes incurred by the Executive as a result of receiving the foregoing benefits)
that are not covered under the medical and dental plans otherwise covering the
Executive.
4. Termination.
4.1 Death. Upon the death of the Executive, the
Employment Period shall automatically terminate and all rights of the Executive
and her heirs, executors and administrators to compensation and other benefits
hereunder shall cease, except for (i) Base Salary accrued to the date of death,
(ii) all of the Bonus to which the Executive would have been entitled under
Section 3.2 hereof for the year in which such termination occurred as though the
Executive were still employed on the Payment Date with respect to such year,
pro-rated to the date of termination ("Prorated Bonus"), (iii) any rights the
Executive may have with respect to Holding Company equity, whether under
compensation plans or otherwise, and (iv) rights to indemnification under
Section 6 hereof (clauses (i) through (iv), collectively the "Accrued
Benefits").
4.2 Disability. The Company may, at its option,
terminate the Employment Period upon written notice to the Executive if the
Executive, because of physical or mental incapacity or disability, fails in any
material respect to perform the services required of her hereunder for a
continuous period of 120 days or any 180 days out of any 12-month period. Upon
such termination, all obligations of the Company hereunder shall cease, except
for the Accrued Benefits. In the event of any dispute regarding the existence of
the Executive's incapacity hereunder, the matter shall be resolved by the
determination of a majority of three physicians qualified to practice medicine
in the state of the Executive's residence, one to be selected by each of the
Executive and the Board and the third to be selected by such two designated
physicians. For this purpose, the Executive shall submit to appropriate medical
examinations reasonably necessary to determine her capacity to perform the
services required to be performed by her hereunder.
4.3 Cause.
(a) The Company may, at its option,
terminate the Executive's employment under this Agreement for "Cause" (as
hereinafter defined). A termination for Cause shall not take effect until and
unless the Company complies with this Section 4.3(a). The Executive shall be
given written notice by the Board of the intention to terminate her employment
hereunder for Cause (the "Cause Notice"). The Cause Notice shall state the
particular action(s) or inaction(s) giving rise to termination for Cause. The
Executive shall have 10 days (or such longer period not to exceed 30 days as
would be reasonably required for the Executive to cure such action or inaction)
after the Cause Notice is given to cure the particular action(s) or inaction(s),
to the extent a cure is possible. If the Executive so effects a cure, the Cause
Notice shall be deemed rescinded and of no force or effect.
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(b) As used in this Agreement, the term
"Cause" shall mean any one or more of the following:
(i) the Executive's refusal to
perform specific directives of the Board which are
consistent with the scope and nature of the Executive's
duties and responsibilities as set forth herein or her
continued failure to substantially perform her duties
hereunder;
(ii) the Executive's admission,
plea of no contest or conviction of a felony or of any crime
involving fraud, embezzlement, theft or misrepresentation or
material dishonesty in the performance of her duties;
(iii) any gross or willful
misconduct of the Executive resulting in substantial
economic loss to the Company or substantial damage to the
Company's reputation;
(iv) any material breach by the
Executive of any one or more of the covenants contained in
Section 7 or 8 hereof, other than an inadvertent and
unintentional breach of a covenant contained in Section 7 or
8 having an immaterial effect upon the Company or any of its
controlled affiliates; or
(v) any material breach by the
Executive of any other material terms of this Agreement.
(c) The exercise of the right of the Company
to terminate this Agreement pursuant to this Section 4.3 shall not abrogate the
rights or remedies of the Company in respect of the breach giving rise to such
termination.
(d) If the Company terminates the
Executive's employment for Cause, she shall be entitled to:
(i) accrued Base Salary through
the date of the termination of her employment;
(ii) any Bonus owing but not yet
paid for any Fiscal Year ended on or before the Executive's
termination of employment for Cause;
(iii) any amounts owing but not yet
paid pursuant to Sections 3.4, 3.5, 3.6 and 3.7; and
(iv) other or additional benefits
in accordance with applicable plans and programs of the
Company and her rights to indemnification under Section 6
hereof.
(e) Notwithstanding anything to the contrary
contained in this Agreement, if, following a termination of the Executive's
employment for Cause, a court of competent jurisdiction, in a final
determination, determines that the Executive was not guilty of the conduct that
formed the basis for the termination, the Executive shall be entitled to the
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payments and the economic equivalent of the benefits she would have received had
her employment been terminated by the Company without Cause.
4.4 Termination Without Cause. If the Board
terminates the employment of the Executive hereunder for any reason other than a
reason set forth in Section 4.1, 4.2 or 4.3 or the Company notifies the
Executive of non-renewal of this Agreement with respect to any period prior to
the fifth anniversary of the Effective Date hereof:
(a) such termination shall be effective 90
days following written notice thereof by the Company to the Executive;
(b) concurrent with such termination, the
Company shall pay to the Executive an amount equal to any Base Salary accrued
but unpaid through the termination date, and when Bonuses are otherwise payable,
the Prorated Bonus;
(c) the Company shall continue to pay the
Executive her Base Salary for a period of 18 months following the date of
termination (the "Severance Period");
(d) the Company shall maintain in full force
and effect, for the continued benefit of the Executive during the Severance
Period, the medical, hospitalization, dental, and life insurance programs in
which the Executive was participating immediately prior to the date of
termination at the level in effect and upon substantially the same terms and
conditions (including without limitation contributions required by the Executive
for such benefits) as existed immediately prior to the date of termination;
provided, that, if the Executive cannot continue to participate in the Company
programs providing such benefits, the Company shall arrange to provide the
Executive with the economic equivalent of such benefits which she otherwise
would have been entitled to receive under such plans and programs ("Continued
Benefits"); provided, that, such Continued Benefits shall terminate on the date
or dates the Executive receives substantially similar coverage and benefits,
without waiting period or pre-existing condition limitations, under the plans
and programs of a subsequent employer.
(e) the Executive shall be entitled to any
amounts owing but not yet paid pursuant to Section 3.4 or 3.5;
(f) the Company shall be obligated to pay
for the Executive's automobile expenses in accordance with the first sentence of
Section 3.4; and
(g) the Executive shall be entitled to her
rights to indemnification under Section 6 hereof.
4.5 Voluntary Termination or Expiration of the Term.
The Employment Period shall terminate upon expiration of the Term or if, during
the Employment Period, the Executive voluntarily terminates her employment
hereunder for any reason whatsoever (such termination shall be effective 60 days
following written notice thereof by the Executive to the Company) and the
Executive shall be entitled to the payments specified in Section 4.3(d), it
being agreed and understood that the Executive shall be entitled to her Base
Salary during the period between the date the Executive provides such written
notice to the Company and the date on which the Executive ceases to be employed
by the Company.
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4.6 Termination for Good Reason. The Executive may
terminate her employment under this Agreement for Good Reason (as hereinafter
defined) within 20 days following the occurrence of an event giving rise to Good
Reason, upon notice to the Company setting forth in reasonable detail the nature
of such Good Reason. In the event the Executive terminates this Agreement for
Good Reason, the Executive shall be entitled to the payments and benefits
specified by Sections 4.4(a) through 4.4(f). For purposes of this Agreement,
"Good Reason" shall mean, without the Executive's express written consent, the
occurrence of any one or more of the following events:
(a) the material breach of this Agreement by
the Company which is not cured, if curable, within 20 days after written notice
to the Company of such breach by the Executive;
(b) a material diminution of any of the
Executive's significant duties or the assignment to the Executive of any duties
inconsistent with her duties or the material impairment of the Executive's
ability to function in the positions described in Section 2.1 hereof, in each
case only after the Company shall have had an opportunity to cure (any cure to
be effected within 20 days after appropriate written notice of the basis for
Good Reason is given to the Company by the Executive); or
(c) any reduction in or failure to pay Base
Salary or a material reduction of any benefit or perquisite enjoyed by the
Executive or the failure to continue the Executive's participation in any
incentive compensation plan, unless a plan providing a substantially similar
economic opportunity is substituted or all senior executives suffer a
substantially similar reduction or failure, in either case, only after the
Company has been given an opportunity to cure any such event within 20 days
following the Executive's written notice to the Company.
5. Options to Purchase.
5.1 Call Option. Upon any termination of the
employment of the Executive other than a termination under Section 4.4 or
Section 4.6, the Company (or its designee) shall have the right to purchase and
upon exercise of such right the Executive shall have the obligation to sell, any
equity interests in the Company held by the Executive and exercisable at the
time of such termination on the following terms (the "Call Option"); it being
understood that all options and other restricted securities not exercisable at
the time of such termination of employment (in accordance with this Agreement or
the attached Option Agreement) will be terminated. Upon written notice delivered
within 90 days of termination, the Company (or its designee) may purchase all or
any portion of any such equity interests in the Company then held by the
applicable the Executive at a price equal to the Fair Market Value of such
securities; provided, that, if the Executive is terminated for Cause, the price
per share shall be equal to (i) in the case of shares acquired upon exercise of
stock options, the per share exercise price and (ii) in the case of all other
stock of the Company held by the Executive, for its Fair Market Value as
determined in good faith.
5.2 Put Right. Upon the termination of the employment
of the Executive other than a termination of employment under Section 4.3, the
Executive shall have the right to
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sell to the Company, and upon exercise of such right the Company (or its
designee) shall have the obligation to purchase, all or any portion of the
equity interests in the Company held by the Executive (including without
limitation equity interest acquired pursuant to Awarded Options and equity
interests of the Company purchased by the Executive), it being understood that
all options and other restricted securities not exercisable at the time of such
termination of employment (in accordance with this Agreement or the attached
Option Agreement) will be terminated at a price equal to the Fair Market Value
of such securities (the "Put Option"). Notice of an intention to sell securities
pursuant to the Put Option must be delivered to the Company within one year of
the termination of the Executive's employment. The Company shall have no
obligation to purchase any securities pursuant to this Section 5.2 if such
purchase is prohibited by or would give rise to any default or event of default
under the Company's financing documents; provided, however, that in such
circumstances the obligation to purchase securities pursuant to the Put Option
shall be extended until such time as such circumstances no longer exist.
5.3 Determination of Fair Market Value. For purposes
of this Section 5, the term "Fair Market Value" of any of the Company's equity
securities shall mean, as of any date, a proportionate interest in the fair
value of all of the Company's equity securities determined as of the applicable
date on the basis of a sale of all of the Company's equity securities in an arms
length private sale between a willing buyer and a willing seller, neither acting
under compulsion (or, in the case of an option, the fair value of the shares of
capital stock that may then be purchased upon exercise thereof minus the
exercise price applicable thereto), as initially determined by the Board in its
reasonable good faith judgment (which determination shall take into account all
relevant factors determinative of value but without any discount for lack of
liquidity, minority status or absence of control); provided, that, in the event
that the Executive reasonably disagrees with such determination, the Executive
shall deliver to the Board a written notice of objection within ten days after
the Board notifies the Executive of its determination of Fair Market Value, and
the Board and the Executive will negotiate in good faith to agree on such Fair
Market Value. If such agreement is not reached within 30 days after the
Executive's written notice of objection, Fair Market Value shall be determined
by an investment banker jointly selected by the Board and the Executive, which
investment banker shall submit to the Board and the Executive a report within 30
days of its engagement setting forth such determination (which determination
shall take into account all relevant factors determinative of value but without
any discount for lack of liquidity, minority status or absence of control). If
the parties are unable to agree on an investment banker within 45 days after the
Executive's written notice of objection, the investment banker shall be a
nationally recognized investment banking firm selected jointly by the investment
banker that was proposed by the Board and the investment banker that was
proposed by the Executive. The expenses of such investment banker shall be
allocated between the Company and the Executive so that the Executive's share of
such expenses shall be in the same proportion that the aggregate amount of the
amount disputed by the Executive that is unsuccessfully disputed bears to the
total amount of the amount originally disputed by the Executive and the Company
shall bear the balance of such expenses. The determination of such investment
banker as to Fair Market Value shall be final and binding upon the Company and
the Executive.
5.4 Termination. The provisions of this Section 5 will
terminate upon an initial public offering of the Company's equity securities.
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5.5 Payment. Payment of the purchase price in
connection with any such purchase of the stock under this Section 5 shall be in
the form of cash, or to the extent the Company is not permitted to pay cash
under, or such payment would give rise to any default or event of default under,
the Company's financing documents, in the form of a promissory note. Such
promissory note shall (i) be subordinate to and consistent with provisions of
any obligations of the Company for debt for borrowed money, (ii) have a maturity
of no more than five years from the date of issuance, (iii) be payable in no
more than five substantially equal annual installments of principal and
interest, with the first installment of principal and interest to be paid no
later than 12 months from the date of issuance, and (iv) bear interest at a rate
equal to the applicable federal rate as provided for in Section 1274(d) of the
Code having a maturity comparable to that of such promissory note, plus 200
basis points (i.e., increase in annual rate of two percentage points). In the
event that the Executive is not reasonably satisfied with the terms and
conditions of such promissory note, the Executive shall not be required to sell
such Stock pursuant to this Section 5.
6. Indemnification. To the fullest extent permitted by
applicable law, the Executive (and her heirs, executors and administrators)
shall be indemnified by the Company and its successors and assigns for acts or
failures to act which occurred during her employment. The Executive's right to
indemnification shall include the right to be paid by the Company the expenses
incurred in defending any proceeding in advance of its final disposition,
provided that the Executive shall repay any advanced amounts if it shall be
ultimately determined that the Executive is not entitled to be indemnified for
such expenses under this Agreement or otherwise. The obligations of the Company
pursuant to this Section 6 shall survive the termination of the Employment
Period.
7. Confidentiality. The Executive acknowledges and agrees that
the unauthorized disclosure or misuse of Confidential Information (as
hereinafter defined) will cause substantial damage to the Company. The Executive
shall during the Employment Period and for two years commencing upon termination
thereof hold in confidence any and all Confidential Information that may have
come or may come into her possession or within her knowledge concerning the
products, services, processes, businesses, suppliers, customers and clients of
the Company or its controlled affiliates. The Executive agrees that neither she
nor any person or enterprise controlled by her will for any reason directly or
indirectly, for herself or any other person, use or disclose any Confidential
Information other than in the furtherance of her duties hereunder, provided that
the Executive may disclose Confidential Information which has become generally
available to the public other than as a result of a breach of this Agreement by
the Executive or pursuant to an order of a court of competent jurisdiction or of
a governmental agency, department or commission or otherwise as required by law
or legal process. Upon termination of her employment under this Agreement, the
Executive shall promptly surrender to the Company all documents she believes
contain Confidential Information and that are within her possession or control,
other than documents to which the Executive is or was a party or that relate to
the Executive or the basis, or purported basis, on which her employment was
terminated. For purposes of this Agreement, the term "Confidential Information"
shall mean any trade secrets, proprietary or confidential information,
inventions, manufacturing or industrial processes or procedures, patents,
trademarks, trade names, customer lists, service marks, service names, business
models and plans, copyrights, applications for any of the foregoing, or licenses
of other
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rights in respect thereof, owned or used by, or licensed to, the Company or any
of its controlled affiliates.
8. Restricted Activities.
8.1 Noncompetition. The Executive agrees that for two
years following the end of the Employment Period (the "Noncompete Period"), she
shall not directly engage in any manner in any activity that is directly or
indirectly competitive with the Company or any of its subsidiaries on the date
of termination of employment, and neither the Executive nor any enterprise
controlled by her will become a stockholder, co-venturer, lender, director,
officer, agent or employee of a corporation or member of or lender to a
partnership, engage as a sole proprietor in any business, act as a consultant to
any of the foregoing or otherwise engage directly in any business then conducted
by the Company, that is in competition with the business then conducted by the
Company or any of its subsidiaries in any state in the United States or any
other country in which the Company or any of its subsidiaries has significantly
engaged in the business then conducted by the Company during the Employment
Period; provided, however, that the foregoing shall not prohibit the Executive
from owning less than two percent of the outstanding securities of any class of
capital stock of a corporation the securities of which are regularly traded or
quoted on a national securities exchange or on an inter-dealer quotation system.
8.2 Non-solicitation. The Executive agrees that while
she is employed by the Company and during the Noncompete Period, neither she nor
any person or enterprise controlled by her will, directly or indirectly (i)
solicit for employment or employ any employee of the Company or any of its
affiliates or any person who was employed by the Company or any of its
affiliates at any time within one year prior to the time of the act of
solicitation, (ii) in any way cause, influence, induce, encourage or attempt to
persuade any employee of the Company or any of its affiliates or any person who
was employed by the Company or any of its affiliates at any time within one year
prior to the time of such act to terminate her employment relationship with the
Company or any of its affiliates or (iii) in any way, cause, influence, induce,
encourage or attempt to persuade any customer or vendor of the Company or any of
its affiliates to terminate or diminish its relationship or violate any
agreement with any of them.
8.3 Relief, Reformation; Severability. The Executive
acknowledges that she has carefully read and considered all terms and conditions
of this Agreement, including the restraints imposed by Section 8 hereof. The
Executive acknowledges that there is no adequate remedy at law for a breach of
this Section 8 and that, in the event of such a breach or attempted breach, the
Company shall be entitled to injunctive or other equitable relief to prevent any
such breach, attempted breach or continuing breach, without prejudice to any
other remedies for damages or otherwise. The Executive agrees that the covenants
contained in this Agreement are separate and are reasonable in their nature,
subject matter, geographic limitation, scope and duration and that the Executive
shall not raise any issue of reasonableness as a defense in any proceeding to
enforce any of such covenants. Notwithstanding the foregoing, in the event that
a covenant contained in this Agreement shall be deemed by any court to be
unreasonably broad in any respect, the parties agree that the court may modify
such covenant for the purpose of making such covenant reasonable in scope and
duration. The validity, legality or enforceability of the remaining provisions
of this Agreement shall not be affected by any such modification.
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9. Inventions. The Executive hereby assigns to the Company her
entire right, title and interest in and to all discoveries and improvements,
patentable or otherwise, trade secrets and ideas, writings and copyrightable
material, which may be conceived by the Executive or developed or acquired by
her prior to and during the term of the Employment Period, (but only while
employed by the Company), which directly pertain to the Company's business (the
"Intellectual Property"). The Executive agrees to disclose fully all such
developments to the Company upon its request, which disclosure shall be made in
writing promptly following any such request. The Executive shall, upon the
Company's request and at the Company's sole expense, execute, acknowledge and
deliver to the Company all instruments and do all other acts which are necessary
to enable the Company to file and prosecute applications for, and to acquire,
maintain and enforce, all patents, trademarks and copyrights in all countries,
in respect of the Intellectual Property.
10. Remedies. Each of the Company and the Executive acknowledges
that any material breach of this Agreement will cause irreparable harm to the
other, that such harm will be difficult if not impossible to ascertain, and that
such party shall be entitled to equitable relief, including injunction, against
any actual or threatened breach hereof, without bond and without liability
should such relief be denied, modified or vacated. Neither the right to obtain
such relief nor the obtaining of any such relief shall be exclusive of or
preclude the Company or the Executive (as the case may be) from any other
remedy.
11. Insurance. The Company may, at its election and for its
benefit, insure the Executive against disability, accidental loss or death and
the Executive shall submit to such physical examinations and supply such
information as may be required in connection therewith.
12. Expenses.
12.1 Legal. The Company will reimburse the Executive
for her reasonable out of pocket costs and expenses of obtaining independent
legal advice relating to the negotiation of this Agreement, any disputes or
issues which may arise with respect to this Agreement (including in connection
with the Executive's termination for any reason) and the Executive's related
equity participation in Holding Company, provided, that, the maximum payment
under this Section 12 shall not exceed $20,000.
12.2 Moving. In the event that the Executive is
required to relocate in order to perform her duties hereunder, the Company shall
reimburse the Executive for all out of pocket costs and expenses of moving
(including without limitation all closing costs and expenses incurred by the
Executive, the entire cost of a full pack and a full unpack, temporary housing
and any taxes incurred by the Executive as a result of receiving the foregoing
benefits), if any are required to facilitate such relocation.
13. Assignment. The rights and benefits of the Executive
hereunder shall not be assignable, whether by voluntary or involuntary
assignment or transfer. This Agreement shall be binding upon, and inure to the
benefit of, the successors and assigns of the Company, and the heirs, executors
and administrators of the Executive, and shall be assignable by the Company to
any entity acquiring substantially all of the assets of the Company, whether by
merger, consolidation, sale of assets or similar transactions.
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14. Notices. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and personally delivered, sent
by certified or registered mail or sent by overnight courier service as follows:
if to the Executive, to her address as set forth in the records of the Company
and if to the Company, to the address of its principal executive offices,
attention: Chief Financial Officer, or to any other address designated by any
party hereto by notice similarly given.
15. Waiver of Breach. A waiver by the Company or the Executive
of any breach of any provision of this Agreement by the other party shall not
operate or be construed as a waiver of any other or subsequent breach by the
other party.
16. Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof. This
Agreement may be modified only by an agreement in writing signed by the parties
hereto.
17. Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
19. Withholding. All payments hereunder shall be subject to any
required withholding of Federal, state and local taxes pursuant to any
applicable law or regulation.
20. Section Headings. The section headings in this Agreement are
for convenience of reference only, and they form no part of this Agreement and
shall not affect its interpretation.
21. Applicable Law. The terms of this Agreement shall be
governed by and construed in accordance with the internal laws (as opposed to
the conflict of laws provisions) of the State of Delaware.
22. Prior Agreements. This Agreement supersedes all prior
agreements between the Executive and the Company concerning the Executive's
employment with the Company, including, without limitation, the Prior Employment
Agreement, and none of such agreements shall be of any further force or effect
whatsoever.
23 Survival. The respective rights and obligations of the
parties under this Agreement shall survive the Executive's termination of
employment and the termination of this Agreement to the extent necessary for the
preservation of such rights and obligations, including, without limitations, the
rights and obligations under Sections 5, 7, 8, 9, 10 and 23 of this Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
XXXX SPORTS CORP.
By: /s/ Xxxxxxx X Xxxxxx
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Title: President
XXXX SPORTS, INC.
By: /s/ Xxxxxxx X Xxxxxx
----------------------------------------------
Title: President
EXECUTIVE:
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
